August 23, 2024 • 20 mins
Uncover the pressing realities of the Canadian rail labor lockout and its staggering impact on the auto care industry. In this episode of Traction Control, we're joined by Adam Malik from Turnkey Media who sheds light on how this midnight halt has frozen the movement of critical goods, including automotive parts, and even disrupted commuter trains in major cities like Toronto. From soaring prices in the used car market to the insurmountable strain on alternative transportation methods, we provide a comprehensive look at the chaos rippling through the supply chain.
We also confront the broader challenges that the auto care industry faces amid unyielding supply chain disruptions. By increasing inventory levels and drawing on lessons from the pandemic, parts suppliers and warehouse distributors are stepping up to navigate this complex landscape. Join us as we discuss the rising costs, the tough decisions drivers must make, and the critical role of strategic planning to ensure continued service and safety. This episode is packed with expert insights and actionable takeaways that you can't afford to miss.
To learn more about the Auto Care Association visit autocare.org.
To learn more about our show and suggest future topics and guests, visit autocare.org/podcast
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 2 (00:10):
Welcome to Auto Care On Air, a candid podcast for a
curious industry.
I'm Stacey Miller, vicePresident of Communications at
the Auto Care Association, andthis is Traction Control, where
we chat about recent news fromthe global to the local level
and what it may mean to theindustry, featuring guests on
the front lines.
Let's roll All right.
We're talking about a prettyserious issue today, a really
(00:33):
timely issue that's happeningwith our friends up north in
Canada.
So I wanted to call my friend,adam Malik.
Adam is from Turnkey Media,which manages automotive
magazines such as Jobber News,cars and EVWorld, and, quite
frankly, anytime I have an issuethat's going on in Canada, I
turn to Adam because he's one ofthe greats reporting what's
going on up north and makingsure that we're all on the same
(00:55):
page talking about the effectson the automotive aftermarket.
So welcome, adam.
Speaker 1 (01:00):
Thank you, stacey, happy to be here.
Speaker 2 (01:02):
Awesome.
So Adam, tell me what's goingon with the Canadian railways.
Something pretty serioushappened at midnight.
Speaker 1 (01:08):
Yeah, midnight this morning Cane Railways both main
railways went on strike,basically shutting down movement
of goods across the country,and not just across the country
but into the US as well, goingback and forth They've shut down
.
We've been hearing about thisfor several weeks, if not maybe
months, that this could behappening.
I think most people hope that.
(01:30):
You know, like most seriousnegotiations, you know it would
reach a last-minute decision,but it didn't happen.
Everything from consumer goods,commercial goods, commuter
trains, even in Toronto, allground to a halt.
Speaker 2 (01:46):
That is absolutely insane to think about.
I was doing some research andit said, like you said,
everything from agriculturethere's auto parts on those
trains, which is something thatwe need to talk about here today
but even the commuters.
So this is going to affectpeople going to work this
morning, right?
Speaker 1 (02:03):
Yep, yes, on the news this morning, people were just
going I can't go in, you know orthey're finding alternative
methods.
What the methods are, I don'tknow.
Either.
You know grabbing an Uber forthe normal, you know, hour long
commute, I don't know.
But yeah, people, people aren'tgoing to work, things aren't
moving and yeah, it's justreally shutting down a lot of
the way we're just doingbusiness around here.
Speaker 2 (02:23):
So the labor dispute?
From what I read, it shut downtwo major freight railroads.
Do we know how many people thataffects the people who actually
work there?
Speaker 1 (02:34):
I don't know how many people it affects, but these
are two significant rail linesin Canada.
They crisscross the country and, like I said, they go into the
US, from the US back in Canada.
They crisscross the country and, like I said, they go into the
US, from the US back into Canada.
These are the major lines forgoods movement in Canada.
Speaker 2 (02:53):
Yeah and this is something that I didn't really
think about until the news brokeis how many goods travel across
the borders that are kind ofvital to the US economy.
So this is a pretty big dealfor a lot of businesses.
But we're going to look at itfrom the lens of automotive, so
has this I mean, I'm just verynew to the topic has this
(03:14):
happened before with therailways in Canada?
Do you know?
Speaker 1 (03:17):
In terms of a strike?
No, not that I can see.
There was one guy from CHRobinson, which is a 3PL company
.
He was saying they've been inCanada for 100 years.
One guy from CH Robinson, whichis a 3PL company.
He was saying they've been inCanada for 100 years.
Never had a railway disruption,at least in terms of a strike,
anyway.
No labor disruption to railway.
So this is really unprecedentedfor us.
Speaker 2 (03:40):
Wow, really new, really fresh.
They're saying billions ofdollars in all the goods period
are on these trains.
It's confirmed that auto partsare on these trains.
But tell me a little bit aboutyour take on what you think the
effects could be on theautomotive aftermarket.
Speaker 1 (03:52):
It's pretty, pretty widespread, I think, the effects
on the aftermarket.
If you start looking at firstat the automotive industry as a
whole from the OE side, you knowwe got parts coming in from
Europe.
They'll hit Montreal, the portof Montreal, and they'll be
shipped to Detroit, for example,you know, to build vehicles or
rail, or these railways will beused to build cars and then they
(04:14):
can't get the cars, maybe theyalready have shipped out.
Well, now we're kind of back inthat problem of where new
vehicle inventories are nowsuddenly going down because
(04:36):
dealers can't get their cars,cars can't be built, and we're
going to see that effect that wekind of saw during the pandemic
, where lack of inventory, allof a sudden now people look to
the used market, used prices goup, people hang on to their cars
longer, that sort of thing.
And on first glance to me Ithink you know, hey, that sounds
good for the industry, becauseyou know if it's more expensive
(04:59):
to buy a new car, or just aren'tnew cars available, or even if
it's too expensive to buy a usedcar, and the people are going
to say, hey, well then I'm justgoing to replace my car, I'm
going to go to my shop down thestreet and I'm going to get it
repaired there.
Great good stuff for theaftermarket, right?
Well, yes, on first glance, Isuppose.
But on those railways are autoparts as well like aftermarket
(05:21):
auto parts as well.
And this is the whole part ofthe USMCA, the new NAFTA
agreement, north American FreeTrade Agreement.
You know, parts go back andforth between our countries very
often I can't remember theexact number, but I think it's
at least some parts are a dozentimes They'll go back and forth.
And if there's no way to sendthem by rail, well now you're
sending them by trucks, andtrucks simply can't carry the
(05:49):
load that railways do, right,just the volume and they're.
I mean, it's summer now, youknow, but if this were to carry
on in the winter, or if thishappened in the winter, you know
, you know weather becomes afactor in moving freight around
by trucks.
So you really want to have asolid rail system.
So, uh, you know, I can seethat driving up aftermarket
prices, maybe we can't even getthe parts now.
Uh, kind of that problem we hadin the pandemic, where just
(06:10):
supply, supply constraints justreally, really hurt the
aftermarket.
Uh, could we see that again?
It depends how long on.
This goes um.
But that just high level secondbase suppose, is just the
impact it could have on ourindustry.
Speaker 2 (06:24):
Yeah, and my mind went exactly.
We had the same thought trainthat it's like COVID, or when
the ship couldn't make itthrough the canal right.
We've seen major delays in thesupply chain and day after day
after day means another day ofimpact.
So, you know, I think about howdid our industry respond during
(06:44):
that time, and we saw companiesyou know I think about how did
our industry respond during thattime and we saw companies, you
know, opening up new warehouses,diversifying where their supply
was across the US from east towest, in order to make sure that
they had distribution networks.
So you know, if they'reaffected on one side of the US,
they can be able to distributefrom the other side.
Canada is obviously massive.
Are you seeing the same, withaftermarket companies looking to
(07:07):
diversify their distributionstrategy, their strategies,
rather as a result of what theylearned from COVID and these
other major, unprecedentedsupply chain impacts that we've
had the past couple of years?
Speaker 1 (07:21):
yeah, canada's very much unique in that way from the
us, where we are a large landmass that is sparsely populated.
Right, americans have numbers10 to 1, basically, right.
So we are spread over a largearea and we're really most of
our population is concentratingon toronto, montreal, vancouver,
that sort of thing, but there'sa lot in the rural areas, uh,
so getting parts out to them isis a totally different ball game
(07:41):
.
But you're seeing, seeing, Idon't necessarily, I'm not
necessarily going to say thatthe distributors here have put a
thought into putting mobilewarehouses everywhere.
But you know there is at leastone distributor.
You know, vast Auto, forexample, just opened a new
satellite warehouse west ofToronto.
You know, was that just toanticipation of this or just to
(08:04):
serve the greater market?
I'm not quite sure, but I thinkthis or just to serve the
greater market, I'm not quitesure, but I think it's more to
serve the greater market.
But you know, having an extrawarehouse, I'm sure it doesn't
hurt.
But when I talk to, to jobbers,to the, to the parts of the
sellers, you know they arealways looking to expand their
footprint, their physicalfootprint, their store, because
there's just so many auto partsout there right now they need
more and more space, open theirstore, because there's just so
(08:26):
many auto parts out there rightnow.
They need more and more space.
And something that came out ofcovid was there was a lot of
talk you know the just in timeuh shipping method, the lean uh
shipping.
You know, toyota was famouslyuh famous for that, you know,
and that's.
You know where you ordersomething and you know it just
comes.
You know you order it and itcomes.
And there's a lot of movement.
Now I I think to move away fromthat to say, hey, you know what
(08:46):
Labor disruption, supply chaindisruptions, we don't want that
again.
So we're going to fill up ourwarehouses, we're going to
expand our warehouses, we'regoing to have more parts in our
warehouses so that when there isanother pandemic Well, not in
this case and now it's a realstrike that could impact the
parts you can get.
So now it's a real strike thatcould impact the parts you can
get.
Now I think there's much greaterattention being paid to
(09:07):
distributors, suppliers, justmaking sure that they have more
in stock as opposed to you knowjust that lean manufacturing.
And even you want to ownnearshoring.
You know nearshoring has been abig topic recently.
You know, moving moreproduction to Mexico, for
example.
Well, how's that stuff be moved?
Again is what you wouldgenerally would want because it
(09:28):
moves faster.
Yes, some stuff moves by truck,but you know this idea of one
idea.
It's happened now the strike,um, how does that impact
nearshoring?
Now, because you're, if you'redepending on, on these, uh,
these systems to move your stuffaround, and now it's on this
labor disruption, is it stillreliable?
You know it's, it's just, youknow, kind of feels like one
blow after another for for theauto sector.
(09:49):
You know it's, um, it's just,the hits keep coming and it's
just another, uh, another thingthat this industry has to react
to yeah, absolutely.
Speaker 2 (09:58):
I mean talk about nearshoring and having things in
mexico I was reading related tothe labor dispute that CDK, I
guess, has trains in Mexico butthey're allowed to run in Mexico
but they can't, you know, crossany borders or anything like
that, so it doesn't really helpus get more parts, unfortunately
.
So really really big deal.
(10:19):
You know, one of the otherthings that I heard coming out
of the pandemic and coming outof some of the other supply
chain disruptions gosh, we hadso many thinking back upon it,
yet we were still such aresilient industry as we heard.
You know, parts suppliers andand warehouse distributors
talking about having moreinventory like more inventory
than they need, you know, inorder to be able to surmount
(10:43):
something like this, would it,you know, should it happen again
?
And here it is happening again?
Are you hearing things likethat on the ground in Canada?
Speaker 1 (10:51):
Well, I don't think it's just the Canada, I think
it's the industry as a whole.
Right, I think they're sayingwe need to have more parts in
stock.
You know, parts proliferationalone is an issue.
I remember actually I think itwas John Washbush from the
Alliance issue.
I remember actually I think itwas John Washbush from the
Alliance and he was talking Ibelieve it was a Yang seminar
where he said you know, this ismore about the peak of the
pandemic, or maybe he wastalking about the peak of the
(11:11):
pandemic anyway, but you know,we were just selling out of
everything.
You know, it didn't even mattergood, bad or best, it's just
what do you got?
Do you got this break part?
Do you have this muffler?
Do you have?
Just give it to us.
We need to serve thesecustomers and we may end up
seeing that again.
If, again, if parts are supplychain disrupted.
(11:32):
You know these retail outletsjust maybe going yeah, here,
here's what we got.
This is all I got left here.
You know, just have your pick.
Which of these do you want?
Like, do you want yourpreferred brand?
Well, sorry, that's not reallygoing to happen here.
Um, we got.
You don't want brand a, we gotbrand b.
Here you go.
That's all we got.
That's what you got to dealwith, and you know it's chaos.
It can't be chaos.
(11:52):
I suppose you know, when youdon't know what you're going to
get, if you're going to get thereliable part that you're always
used to, um.
But you know, it's what yousaid.
This industry is resilient,found a way to get through it,
we got through it it andprobably came out better for it
at the end.
Now has enough time passed toreally build up that resiliency
to be prepared for the nextdisruption.
I don't know, we'll find out.
(12:13):
But you know this is aresilient industry.
You always be able to bounceback and you know you got to
expect the same to happen here.
Speaker 2 (12:21):
Yeah, that's right.
I mean, I get a little freakedout Maybe you do too when I hear
about parts not being availableand the prices going up, and
that gets passed down to thedrivers.
It gets passed down to me, toyou, to our friends, to our
family, to our colleagues.
And there's this stat that wepublish.
We publish every couple ofyears in the fact book.
It comes from IMR, which is nowEndeavor.
(12:44):
It's the delayed maintenancenumber.
So there's something like $30billion in delayed maintenance
and some of that can be due tocost.
So if cost is rising anddrivers aren't maintaining their
cars because it's too expensiveat the time and they're making
decisions in this economy that'srife with inflation, hey, I'm
going to buy groceries, I'm notgoing to change the brakes on my
(13:05):
car.
That's a scary thought, knowingthat there's unsafe cars on the
road because they can't affordthose parts.
So it's a big deal and thisindustry really needs to respond
to make sure that we have somesort of parts to provide to the
drivers in the end and that wecan offer them at a price that's
still going to allow them to beon the road safer longer,
(13:25):
absolutely.
Speaker 1 (13:25):
And I don't want to misattribute to who said this, I
can't remember, but I'm prettysure it was said at Apex last
year, where people, yeah, it'severything, everything is going
up in terms of cost, and whenit's got my car fixed or buy
groceries, you know well,groceries come out on top.
You know, and and it's itchanged a bit of the customer
too.
You know, the people who couldafford it, um, were uh, um, uh,
(13:50):
there's a certain segment of theof the population that can
afford to get their car fixed,and so they didn't really have
those concerns.
And it was changing the shapeof the customer that shops and
outlets were seeing.
Because, you know, you're soused to seeing maybe the, the
lower income guys, because theyneed their car, they have to get
to work, it's their livelihoodversus maybe more the white
colored people who maybe workfrom home, are now more remote,
(14:11):
less so, but they are the oneswho, uh, have the money to spend
in the aftermarket, versus the,the lower income folks who are
saying, listen, let's get my carfixed or buy dinner tonight.
You know what's it going to be.
You know it's really changedhow, how this industry, uh, the
customers we're seeing and howwe basically think.
Speaker 2 (14:30):
It really has and it's something you know.
Unfortunately, we have toanticipate this now, um, for the
rest of our lives, right?
Anything could happen.
Anything could happen at anytime and we're not going to get
much warning.
I think um really changed thatand it changed the way that
companies think about theirstrategies and their parts
proliferation, as you weresaying.
(14:50):
So astounding really astoundingto hear this news overnight.
Speaker 1 (14:54):
Yeah, and these black swan events right that they
were calling them.
You know, pandemic is one, nowis this labor disruption going
to be one?
How long will this last?
I'm If I were to guess it's notgoing to last too long.
I imagine that the disruptionto commerce will be too much for
the government to ignore.
I think eventually they willstep in.
(15:15):
Eventually I mean really soonthey will step in and say you
know what, back to worklegislation or binding
arbitration, something like that.
Because for our understanding,speaking for our industry,
you're going to see theirwarning of auto plants is
shutting down because they can'tget the parts.
So people aren't going to beworking, people are going to be
out of work.
I think the pressure willreally be on to get a quick
resolution to this.
I can't see it dragging on.
(15:37):
I mean, who knows?
But I think this would beresolved.
I hope it gets resolved fairlyquickly.
Speaker 2 (15:43):
That is all of our hope and you know I neglected to
mention.
I wanted to have you share someof kind of like the top line
industries for the automotiveaftermarket in Canada, for those
who aren't really well versedon how many parts and how many
people actually make up ourindustry in Canada.
Speaker 1 (16:00):
So we're about a 37.8 , if I'm hearing correctly,
about $38 billion industry inCanada.
8, if I'm hearing correctly,about $38 billion industry in
Canada, affecting hundreds ofthousands, directly and
indirectly, of jobs acrossCanada.
You know we have, like we're avast country, a very unique
country in the sense you know wehave.
You get the French-speakingpopulation in Quebec, you got
(16:25):
way out in BC and then you gotthe prairies in the middle there
which are, you know,everybody's got their own
dynamic here, but it's verywidespread, very, I like to.
You know it's, it's a, it's a,it's a, it's a vast area, but
we're very small and veryconnected here.
So, yeah, a lot of, a lot ofpeople put to work thanks to the
(16:45):
automotive aftermarket inCanada, that's for sure,
including me.
Speaker 2 (16:49):
A really amazing industry and a massive part of
our ecosystem here in NorthAmerica.
So, Adam, is there anythingelse or any other thoughts on
this event that we want to sharewith our listeners?
Speaker 1 (17:01):
No, I think you know, I think people's jobs here are
at risk.
I mean, no, I shouldn't put itthat but way.
But when you talk about plantsshutting down for auto
production because they can'tget the parts, I think that's a
very real risk to our broadersector.
And then the cost of parts ifwe can't get it, they'll go up
because we just can't get theparts.
Keeping that supply chainmoving, I think it could have a
(17:23):
huge effect like pandemic-likeeffect that we saw.
So hopefully this gets resolvedin short order and you know we
can go back to the way thingswere.
But I think that resiliencepart is really hits home for
this.
We've got to be resilient, weare resilient and just make sure
that we can always respond tosuch issues.
Speaker 2 (17:46):
All right, and I hear that there's maybe another
implication related to thislabor dispute in Canada.
What is that?
Speaker 1 (17:54):
Well, less in Canada, more US.
Now there's talk of US portstrikes happening on October 1st
, I think.
85,000 members, something likethat, are now in a position
where they could walk off thejob.
So we could be looking at ifthis rail strike drags on, which
I don't think it will,hopefully it doesn't.
You know, we could have a railstrike and a port strike.
(18:14):
And how will that affect?
Because, you know, inanticipation of these rail
strikes, a lot of shippers werediverting their ports.
So, instead of coming intoMontreal, instead of coming to
BC, they were going around toother ports.
Well, instead of coming intoMontreal, instead of coming to
BC, they were going around toother ports.
Well, if these ports now go onstrike and this rail situation
hasn't been settled, chaos isthe word that comes to mind.
(18:36):
Anarchy maybe, I don't know,but it could really set things
pun intended, I suppose, off therails.
Speaker 2 (18:44):
Oh my gosh, no way, I mean we've dealt with the port
of Los Angeles.
Obviously, the Baltimore Bridgecollapse was a really big deal
for automotive.
We're actually going to be atthe Port of Baltimore in a week
at our fall leadership days tosee the impacts and see how
they've been recovering, sothat's a pretty big deal.
So we're hoping that aresolution comes through here
(19:06):
very, very soon.
Speaker 1 (19:07):
I want to punch after the other.
It feels like.
Speaker 2 (19:10):
Adam, where can people find you if they want to
keep in touch with you or readsome of the stories that you're
publishing, as you're doing?
Some of the most relevantcontent that I've seen coming
out of Canada.
Speaker 1 (19:19):
Oh, thank you, I appreciate that.
So, online we're atautoserviceworldcom.
That is the online portal for,like I mentioned, our magazines
and daily news.
Always, that is the onlineportal for our like.
You mentioned our magazines anddaily news.
You know, always keeping peopleupdated as best we can.
We've got multiple newslettersgoing out throughout the week
for a week and then, as I'm onLinkedIn, you can find me there,
search my name.
I'm sure you'll find me happyto connect, and I always would
(19:41):
like to like to share our topstories, our top reads, just
what's happening in the industry.
You know I'm all about makingthis industry better and making
a better place for all of us andmake it successful, because I
want it to be successful.
So, yeah, autoserviceworldcom,our website, and yeah, find me
on LinkedIn.
Speaker 2 (19:58):
Great.
Thank you so much, Adam.
Speaker 1 (20:00):
Oh, Stacey, it was a pleasure to be here.
Thank you so much for having me.
Speaker 2 (20:04):
Thanks for tuning in to another episode of Auto Care
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Auto Care On Air is aproduction of the Auto Care
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To learn more about theassociation and its initiatives,
(20:26):
visit AutoCareorg.
Welcome to Auto Care On Air, a candid podcast for a
curious industry.
I'm Stacey Miller, vicePresident of Communications at
the Auto Care Association, andthis is Traction Control, where
we chat about recent news fromthe global to the local level
and what it may mean to theindustry, featuring guests on
the front lines.
Let's roll All right.
We're talking about a prettyserious issue today, a really
(00:33):
timely issue that's happeningwith our friends up north in
Canada.
So I wanted to call my friend,adam Malik.
Adam is from Turnkey Media,which manages automotive
magazines such as Jobber News,cars and EVWorld, and, quite
frankly, anytime I have an issuethat's going on in Canada, I
turn to Adam because he's one ofthe greats reporting what's
going on up north and makingsure that we're all on the same
(00:55):
page talking about the effectson the automotive aftermarket.
So welcome, adam.
Speaker 1 (01:00):
Thank you, stacey, happy to be here.
Speaker 2 (01:02):
Awesome.
So Adam, tell me what's goingon with the Canadian railways.
Something pretty serioushappened at midnight.
Speaker 1 (01:08):
Yeah, midnight this morning Cane Railways both main
railways went on strike,basically shutting down movement
of goods across the country,and not just across the country
but into the US as well, goingback and forth They've shut down
.
We've been hearing about thisfor several weeks, if not maybe
months, that this could behappening.
I think most people hope that.
(01:30):
You know, like most seriousnegotiations, you know it would
reach a last-minute decision,but it didn't happen.
Everything from consumer goods,commercial goods, commuter
trains, even in Toronto, allground to a halt.
Speaker 2 (01:46):
That is absolutely insane to think about.
I was doing some research andit said, like you said,
everything from agriculturethere's auto parts on those
trains, which is something thatwe need to talk about here today
but even the commuters.
So this is going to affectpeople going to work this
morning, right?
Speaker 1 (02:03):
Yep, yes, on the news this morning, people were just
going I can't go in, you know orthey're finding alternative
methods.
What the methods are, I don'tknow.
Either.
You know grabbing an Uber forthe normal, you know, hour long
commute, I don't know.
But yeah, people, people aren'tgoing to work, things aren't
moving and yeah, it's justreally shutting down a lot of
the way we're just doingbusiness around here.
Speaker 2 (02:23):
So the labor dispute?
From what I read, it shut downtwo major freight railroads.
Do we know how many people thataffects the people who actually
work there?
Speaker 1 (02:34):
I don't know how many people it affects, but these
are two significant rail linesin Canada.
They crisscross the country and, like I said, they go into the
US, from the US back in Canada.
They crisscross the country and, like I said, they go into the
US, from the US back into Canada.
These are the major lines forgoods movement in Canada.
Speaker 2 (02:53):
Yeah and this is something that I didn't really
think about until the news brokeis how many goods travel across
the borders that are kind ofvital to the US economy.
So this is a pretty big dealfor a lot of businesses.
But we're going to look at itfrom the lens of automotive, so
has this I mean, I'm just verynew to the topic has this
(03:14):
happened before with therailways in Canada?
Do you know?
Speaker 1 (03:17):
In terms of a strike?
No, not that I can see.
There was one guy from CHRobinson, which is a 3PL company
.
He was saying they've been inCanada for 100 years.
One guy from CH Robinson, whichis a 3PL company.
He was saying they've been inCanada for 100 years.
Never had a railway disruption,at least in terms of a strike,
anyway.
No labor disruption to railway.
So this is really unprecedentedfor us.
Speaker 2 (03:40):
Wow, really new, really fresh.
They're saying billions ofdollars in all the goods period
are on these trains.
It's confirmed that auto partsare on these trains.
But tell me a little bit aboutyour take on what you think the
effects could be on theautomotive aftermarket.
Speaker 1 (03:52):
It's pretty, pretty widespread, I think, the effects
on the aftermarket.
If you start looking at firstat the automotive industry as a
whole from the OE side, you knowwe got parts coming in from
Europe.
They'll hit Montreal, the portof Montreal, and they'll be
shipped to Detroit, for example,you know, to build vehicles or
rail, or these railways will beused to build cars and then they
(04:14):
can't get the cars, maybe theyalready have shipped out.
Well, now we're kind of back inthat problem of where new
vehicle inventories are nowsuddenly going down because
(04:36):
dealers can't get their cars,cars can't be built, and we're
going to see that effect that wekind of saw during the pandemic
, where lack of inventory, allof a sudden now people look to
the used market, used prices goup, people hang on to their cars
longer, that sort of thing.
And on first glance to me Ithink you know, hey, that sounds
good for the industry, becauseyou know if it's more expensive
(04:59):
to buy a new car, or just aren'tnew cars available, or even if
it's too expensive to buy a usedcar, and the people are going
to say, hey, well then I'm justgoing to replace my car, I'm
going to go to my shop down thestreet and I'm going to get it
repaired there.
Great good stuff for theaftermarket, right?
Well, yes, on first glance, Isuppose.
But on those railways are autoparts as well like aftermarket
(05:21):
auto parts as well.
And this is the whole part ofthe USMCA, the new NAFTA
agreement, north American FreeTrade Agreement.
You know, parts go back andforth between our countries very
often I can't remember theexact number, but I think it's
at least some parts are a dozentimes They'll go back and forth.
And if there's no way to sendthem by rail, well now you're
sending them by trucks, andtrucks simply can't carry the
(05:49):
load that railways do, right,just the volume and they're.
I mean, it's summer now, youknow, but if this were to carry
on in the winter, or if thishappened in the winter, you know
, you know weather becomes afactor in moving freight around
by trucks.
So you really want to have asolid rail system.
So, uh, you know, I can seethat driving up aftermarket
prices, maybe we can't even getthe parts now.
Uh, kind of that problem we hadin the pandemic, where just
(06:10):
supply, supply constraints justreally, really hurt the
aftermarket.
Uh, could we see that again?
It depends how long on.
This goes um.
But that just high level secondbase suppose, is just the
impact it could have on ourindustry.
Speaker 2 (06:24):
Yeah, and my mind went exactly.
We had the same thought trainthat it's like COVID, or when
the ship couldn't make itthrough the canal right.
We've seen major delays in thesupply chain and day after day
after day means another day ofimpact.
So, you know, I think about howdid our industry respond during
(06:44):
that time, and we saw companiesyou know I think about how did
our industry respond during thattime and we saw companies, you
know, opening up new warehouses,diversifying where their supply
was across the US from east towest, in order to make sure that
they had distribution networks.
So you know, if they'reaffected on one side of the US,
they can be able to distributefrom the other side.
Canada is obviously massive.
Are you seeing the same, withaftermarket companies looking to
(07:07):
diversify their distributionstrategy, their strategies,
rather as a result of what theylearned from COVID and these
other major, unprecedentedsupply chain impacts that we've
had the past couple of years?
Speaker 1 (07:21):
yeah, canada's very much unique in that way from the
us, where we are a large landmass that is sparsely populated.
Right, americans have numbers10 to 1, basically, right.
So we are spread over a largearea and we're really most of
our population is concentratingon toronto, montreal, vancouver,
that sort of thing, but there'sa lot in the rural areas, uh,
so getting parts out to them isis a totally different ball game
(07:41):
.
But you're seeing, seeing, Idon't necessarily, I'm not
necessarily going to say thatthe distributors here have put a
thought into putting mobilewarehouses everywhere.
But you know there is at leastone distributor.
You know, vast Auto, forexample, just opened a new
satellite warehouse west ofToronto.
You know, was that just toanticipation of this or just to
(08:04):
serve the greater market?
I'm not quite sure, but I thinkthis or just to serve the
greater market, I'm not quitesure, but I think it's more to
serve the greater market.
But you know, having an extrawarehouse, I'm sure it doesn't
hurt.
But when I talk to, to jobbers,to the, to the parts of the
sellers, you know they arealways looking to expand their
footprint, their physicalfootprint, their store, because
there's just so many auto partsout there right now they need
more and more space, open theirstore, because there's just so
(08:26):
many auto parts out there rightnow.
They need more and more space.
And something that came out ofcovid was there was a lot of
talk you know the just in timeuh shipping method, the lean uh
shipping.
You know, toyota was famouslyuh famous for that, you know,
and that's.
You know where you ordersomething and you know it just
comes.
You know you order it and itcomes.
And there's a lot of movement.
Now I I think to move away fromthat to say, hey, you know what
(08:46):
Labor disruption, supply chaindisruptions, we don't want that
again.
So we're going to fill up ourwarehouses, we're going to
expand our warehouses, we'regoing to have more parts in our
warehouses so that when there isanother pandemic Well, not in
this case and now it's a realstrike that could impact the
parts you can get.
So now it's a real strike thatcould impact the parts you can
get.
Now I think there's much greaterattention being paid to
(09:07):
distributors, suppliers, justmaking sure that they have more
in stock as opposed to you knowjust that lean manufacturing.
And even you want to ownnearshoring.
You know nearshoring has been abig topic recently.
You know, moving moreproduction to Mexico, for
example.
Well, how's that stuff be moved?
Again is what you wouldgenerally would want because it
(09:28):
moves faster.
Yes, some stuff moves by truck,but you know this idea of one
idea.
It's happened now the strike,um, how does that impact
nearshoring?
Now, because you're, if you'redepending on, on these, uh,
these systems to move your stuffaround, and now it's on this
labor disruption, is it stillreliable?
You know it's, it's just, youknow, kind of feels like one
blow after another for for theauto sector.
(09:49):
You know it's, um, it's just,the hits keep coming and it's
just another, uh, another thingthat this industry has to react
to yeah, absolutely.
Speaker 2 (09:58):
I mean talk about nearshoring and having things in
mexico I was reading related tothe labor dispute that CDK, I
guess, has trains in Mexico butthey're allowed to run in Mexico
but they can't, you know, crossany borders or anything like
that, so it doesn't really helpus get more parts, unfortunately
.
So really really big deal.
(10:19):
You know, one of the otherthings that I heard coming out
of the pandemic and coming outof some of the other supply
chain disruptions gosh, we hadso many thinking back upon it,
yet we were still such aresilient industry as we heard.
You know, parts suppliers andand warehouse distributors
talking about having moreinventory like more inventory
than they need, you know, inorder to be able to surmount
(10:43):
something like this, would it,you know, should it happen again
?
And here it is happening again?
Are you hearing things likethat on the ground in Canada?
Speaker 1 (10:51):
Well, I don't think it's just the Canada, I think
it's the industry as a whole.
Right, I think they're sayingwe need to have more parts in
stock.
You know, parts proliferationalone is an issue.
I remember actually I think itwas John Washbush from the
Alliance issue.
I remember actually I think itwas John Washbush from the
Alliance and he was talking Ibelieve it was a Yang seminar
where he said you know, this ismore about the peak of the
pandemic, or maybe he wastalking about the peak of the
(11:11):
pandemic anyway, but you know,we were just selling out of
everything.
You know, it didn't even mattergood, bad or best, it's just
what do you got?
Do you got this break part?
Do you have this muffler?
Do you have?
Just give it to us.
We need to serve thesecustomers and we may end up
seeing that again.
If, again, if parts are supplychain disrupted.
(11:32):
You know these retail outletsjust maybe going yeah, here,
here's what we got.
This is all I got left here.
You know, just have your pick.
Which of these do you want?
Like, do you want yourpreferred brand?
Well, sorry, that's not reallygoing to happen here.
Um, we got.
You don't want brand a, we gotbrand b.
Here you go.
That's all we got.
That's what you got to dealwith, and you know it's chaos.
It can't be chaos.
(11:52):
I suppose you know, when youdon't know what you're going to
get, if you're going to get thereliable part that you're always
used to, um.
But you know, it's what yousaid.
This industry is resilient,found a way to get through it,
we got through it it andprobably came out better for it
at the end.
Now has enough time passed toreally build up that resiliency
to be prepared for the nextdisruption.
I don't know, we'll find out.
(12:13):
But you know this is aresilient industry.
You always be able to bounceback and you know you got to
expect the same to happen here.
Speaker 2 (12:21):
Yeah, that's right.
I mean, I get a little freakedout Maybe you do too when I hear
about parts not being availableand the prices going up, and
that gets passed down to thedrivers.
It gets passed down to me, toyou, to our friends, to our
family, to our colleagues.
And there's this stat that wepublish.
We publish every couple ofyears in the fact book.
It comes from IMR, which is nowEndeavor.
(12:44):
It's the delayed maintenancenumber.
So there's something like $30billion in delayed maintenance
and some of that can be due tocost.
So if cost is rising anddrivers aren't maintaining their
cars because it's too expensiveat the time and they're making
decisions in this economy that'srife with inflation, hey, I'm
going to buy groceries, I'm notgoing to change the brakes on my
(13:05):
car.
That's a scary thought, knowingthat there's unsafe cars on the
road because they can't affordthose parts.
So it's a big deal and thisindustry really needs to respond
to make sure that we have somesort of parts to provide to the
drivers in the end and that wecan offer them at a price that's
still going to allow them to beon the road safer longer,
(13:25):
absolutely.
Speaker 1 (13:25):
And I don't want to misattribute to who said this, I
can't remember, but I'm prettysure it was said at Apex last
year, where people, yeah, it'severything, everything is going
up in terms of cost, and whenit's got my car fixed or buy
groceries, you know well,groceries come out on top.
You know, and and it's itchanged a bit of the customer
too.
You know, the people who couldafford it, um, were uh, um, uh,
(13:50):
there's a certain segment of theof the population that can
afford to get their car fixed,and so they didn't really have
those concerns.
And it was changing the shapeof the customer that shops and
outlets were seeing.
Because, you know, you're soused to seeing maybe the, the
lower income guys, because theyneed their car, they have to get
to work, it's their livelihoodversus maybe more the white
colored people who maybe workfrom home, are now more remote,
(14:11):
less so, but they are the oneswho, uh, have the money to spend
in the aftermarket, versus the,the lower income folks who are
saying, listen, let's get my carfixed or buy dinner tonight.
You know what's it going to be.
You know it's really changedhow, how this industry, uh, the
customers we're seeing and howwe basically think.
Speaker 2 (14:30):
It really has and it's something you know.
Unfortunately, we have toanticipate this now, um, for the
rest of our lives, right?
Anything could happen.
Anything could happen at anytime and we're not going to get
much warning.
I think um really changed thatand it changed the way that
companies think about theirstrategies and their parts
proliferation, as you weresaying.
(14:50):
So astounding really astoundingto hear this news overnight.
Speaker 1 (14:54):
Yeah, and these black swan events right that they
were calling them.
You know, pandemic is one, nowis this labor disruption going
to be one?
How long will this last?
I'm If I were to guess it's notgoing to last too long.
I imagine that the disruptionto commerce will be too much for
the government to ignore.
I think eventually they willstep in.
(15:15):
Eventually I mean really soonthey will step in and say you
know what, back to worklegislation or binding
arbitration, something like that.
Because for our understanding,speaking for our industry,
you're going to see theirwarning of auto plants is
shutting down because they can'tget the parts.
So people aren't going to beworking, people are going to be
out of work.
I think the pressure willreally be on to get a quick
resolution to this.
I can't see it dragging on.
(15:37):
I mean, who knows?
But I think this would beresolved.
I hope it gets resolved fairlyquickly.
Speaker 2 (15:43):
That is all of our hope and you know I neglected to
mention.
I wanted to have you share someof kind of like the top line
industries for the automotiveaftermarket in Canada, for those
who aren't really well versedon how many parts and how many
people actually make up ourindustry in Canada.
Speaker 1 (16:00):
So we're about a 37.8 , if I'm hearing correctly,
about $38 billion industry inCanada.
8, if I'm hearing correctly,about $38 billion industry in
Canada, affecting hundreds ofthousands, directly and
indirectly, of jobs acrossCanada.
You know we have, like we're avast country, a very unique
country in the sense you know wehave.
You get the French-speakingpopulation in Quebec, you got
(16:25):
way out in BC and then you gotthe prairies in the middle there
which are, you know,everybody's got their own
dynamic here, but it's verywidespread, very, I like to.
You know it's, it's a, it's a,it's a, it's a vast area, but
we're very small and veryconnected here.
So, yeah, a lot of, a lot ofpeople put to work thanks to the
(16:45):
automotive aftermarket inCanada, that's for sure,
including me.
Speaker 2 (16:49):
A really amazing industry and a massive part of
our ecosystem here in NorthAmerica.
So, Adam, is there anythingelse or any other thoughts on
this event that we want to sharewith our listeners?
Speaker 1 (17:01):
No, I think you know, I think people's jobs here are
at risk.
I mean, no, I shouldn't put itthat but way.
But when you talk about plantsshutting down for auto
production because they can'tget the parts, I think that's a
very real risk to our broadersector.
And then the cost of parts ifwe can't get it, they'll go up
because we just can't get theparts.
Keeping that supply chainmoving, I think it could have a
(17:23):
huge effect like pandemic-likeeffect that we saw.
So hopefully this gets resolvedin short order and you know we
can go back to the way thingswere.
But I think that resiliencepart is really hits home for
this.
We've got to be resilient, weare resilient and just make sure
that we can always respond tosuch issues.
Speaker 2 (17:46):
All right, and I hear that there's maybe another
implication related to thislabor dispute in Canada.
What is that?
Speaker 1 (17:54):
Well, less in Canada, more US.
Now there's talk of US portstrikes happening on October 1st
, I think.
85,000 members, something likethat, are now in a position
where they could walk off thejob.
So we could be looking at ifthis rail strike drags on, which
I don't think it will,hopefully it doesn't.
You know, we could have a railstrike and a port strike.
(18:14):
And how will that affect?
Because, you know, inanticipation of these rail
strikes, a lot of shippers werediverting their ports.
So, instead of coming intoMontreal, instead of coming to
BC, they were going around toother ports.
Well, instead of coming intoMontreal, instead of coming to
BC, they were going around toother ports.
Well, if these ports now go onstrike and this rail situation
hasn't been settled, chaos isthe word that comes to mind.
(18:36):
Anarchy maybe, I don't know,but it could really set things
pun intended, I suppose, off therails.
Speaker 2 (18:44):
Oh my gosh, no way, I mean we've dealt with the port
of Los Angeles.
Obviously, the Baltimore Bridgecollapse was a really big deal
for automotive.
We're actually going to be atthe Port of Baltimore in a week
at our fall leadership days tosee the impacts and see how
they've been recovering, sothat's a pretty big deal.
So we're hoping that aresolution comes through here
(19:06):
very, very soon.
Speaker 1 (19:07):
I want to punch after the other.
It feels like.
Speaker 2 (19:10):
Adam, where can people find you if they want to
keep in touch with you or readsome of the stories that you're
publishing, as you're doing?
Some of the most relevantcontent that I've seen coming
out of Canada.
Speaker 1 (19:19):
Oh, thank you, I appreciate that.
So, online we're atautoserviceworldcom.
That is the online portal for,like I mentioned, our magazines
and daily news.
Always, that is the onlineportal for our like.
You mentioned our magazines anddaily news.
You know, always keeping peopleupdated as best we can.
We've got multiple newslettersgoing out throughout the week
for a week and then, as I'm onLinkedIn, you can find me there,
search my name.
I'm sure you'll find me happyto connect, and I always would
(19:41):
like to like to share our topstories, our top reads, just
what's happening in the industry.
You know I'm all about makingthis industry better and making
a better place for all of us andmake it successful, because I
want it to be successful.
So, yeah, autoserviceworldcom,our website, and yeah, find me
on LinkedIn.
Speaker 2 (19:58):
Great.
Thank you so much, Adam.
Speaker 1 (20:00):
Oh, Stacey, it was a pleasure to be here.
Thank you so much for having me.
Speaker 2 (20:04):
Thanks for tuning in to another episode of Auto Care
On Air.
Make sure to subscribe to ourpodcast so that you never miss
an episode, and don't forget toleave us a rating and review
that helps others discover ourcontent.
Auto Care On Air is aproduction of the Auto Care
Association, dedicated toadvancing the auto care industry
and supporting professionalslike you.
To learn more about theassociation and its initiatives,
(20:26):
visit AutoCareorg.
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